Industry Odisha Bureau, Aug 26: India’s trade deficit problem extends far beyond crude oil imports now. The non-petroleum trade deficit has become substantially larger than petroleum. This structural shift reveals deeper vulnerabilities across manufacturing and electronics. India recorded a $334 billion trade deficit in 2025-26. Petroleum products accounted for $120 billion. Non-petroleum products contributed $214 billion nearly double
the energy deficit.
Since 2022-23, the non-petroleum deficit has consistently exceeded petroleum by 1.4 to 1.8 times. This indicates a fundamental change in India’s import composition. Electronics recorded a $69 billion trade deficit alone. This represented 20 percent of India’s total trade deficit. Electronics comprised 32 percent of the non-petroleum trade deficit specifically.
India meets 85-90 percent of domestic oil demand through imports. Crude oil remains a critical vulnerability for the economy. Yet import dependence now extends across mining, manufacturing and electronics. Mining shows the highest import dependence at 35.4 percent. Manufacturing imports account for 13.8 percent of total supply.
Within manufacturing, import dependence concentrates particularly in industrial inputs. Dependence on finished goods remains relatively low in India. This means imports feed into domestic production rather than consumption. Gems and jewellery represent 56.5 percent of imports by supply. Electronic products rank second at 29.8 percent of supply. Machinery, transport and chemicals also show substantial import dependence.
Electronics illustrate India’s manufacturing challenge with particular clarity. India has built large-scale electronics assembly capacity in recent years. The country emerged as a major exporter to global markets. Yet domestic value addition remains modest at approximately 20 percent. High-value components like semiconductors and displays are still imported. Electronic integrated circuits alone recorded $30 billion in net imports. Semiconductors and electric accumulators each totalled $4.9 billion annually.
The Production-Linked Incentive scheme supported electronics capacity expansion significantly. PLI helped reduce dependence on imported finished products like phones. However, the industry remains heavily reliant on imported components. This reflects the distinction between assembly and deep manufacturing capability. Assembly capacity does not automatically ensure complete manufacturing depth.
Import dependence creates structural vulnerabilities during global supply disruptions. China’s squeeze on rare-earth minerals exposed India’s fragility previously. India’s imports have risen steadily for nearly three decades. Persistent gaps exist across energy, electronics, machinery and minerals. Domestic capacity has not expanded fast enough to meet demand.
Strengthening domestic component production capabilities remains critical for India. The challenge extends beyond assembly into semiconductors and displays. Balancing import reliance with manufacturing depth shapes India’s competitiveness. Supply-chain resilience increasingly depends on reducing external industrial dependence. India’s trade challenge continues evolving beyond crude oil concerns.
